Based on the figure below. Starting from long-run equilibrium at point C, a tax cut that increases aggregate demand from AD to AD1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. D; C
B. B; C
C. B; A
D. D; B
Answer: D
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Joe manages a company that produces lawn mowers. Joe knows that the value of marginal product
A) decreases as he hires more labor to produce lawn mowers. B) does not change as he sells more lawn mowers. C) increases as he hires more labor to produce lawn mowers. D) increases as he sells more lawn mowers.
Refer to Figure 15-3. Suppose the monopolist represented in the diagram above produces positive output. What is the profit-maximizing/loss-minimizing output level?
A) 630 units B) 800 units C) 850 units D) 880 units
If the marginal propensity to consumer is 0.8, the spending multiplier must be:
A. 5 B. 2 C. 1.2 D. 1.8
When attorneys, accountants and other professionals wear expensive clothing, it:
A. does not serve as a credible signal of ability because anyone can wear nice clothes. B. can serve as a credible signal of ability. C. is a waste of money because professionals do not need to signal their ability. D. only serves as a useful signal of ability if they already have well-established reputations.